The last few years have been some of the more
challenging in New Zealand’s history. In the space of five
short years we have endured the worst financial crisis since
the Great Depression, the worst drought in 70 years, and of
course the devastating series of earthquakes in the
Canterbury region.

But we have largely weathered this
storm, and while there will no doubt be further hurdles
along the way, the future is looking bright for New
Zealand.

This year, GDP growth is tracking at 3.5%;
exports for the primary sector are $5 billion ahead of
forecasts; and the Government is on track to reach a surplus
next year.

I believe the leadership of Prime Minister John
Key and Finance Minister Bill English has helped to steady
the ship, and bring the economy on a path to recovery.

But
it is the people sitting here in this room that have pushed
New Zealand along the path of recovery – farmers from all
over New Zealand. Whether it be sheep, beef, dairy,
horticulture, or any other primary industries, it is thanks
to farmers doing their job, and doing it well, that New
Zealand’s future is looking bright. I want to personally
acknowledge this contribution you all make to the New
Zealand economy.

You don’t get thanked enough for doing
the hard yards and producing our fine meat products that are
showcased and consumed around the world.

Today I’d like
to do three things. Firstly I’d like to briefly outline
some of the things this government is doing to help farmers
to continue to thrive. Secondly, I’d like to talk about my
vision for the red meat sector. And finally I’d like to
address the on-going discussions around the structure of the
industry.

The Government’s role

I am
a firm believer that the Government’s role is as an
enabler. The Government does things that help farmers to
continue to prosper.

That is why we have set an overall
goal to double our primary sector exports to $64 billion by
2025.

Once again it will be farmers that do the hard yards
to enable this. But the Government can help.

I have a set
of priorities to achieve this.

Biosecurity is my number
one priority, and will remain my number one priority as long
as I am Minister. A key focus for me in this area is to
increase resources at the border, and we have added over one
hundred positions over the last year or so with more to
come.

We will also implement government industry
agreements (GIAs), and ensure that MPI’s and the
industry’s FMD preparedness programme is on track.

We
are also continuing to develop export opportunities. I will
talk a bit more about this later in the speech, but can I
assure this room that we are doing everything we can to
increase access for our products into a range of countries
including the TPP countries (worth 45% of New Zealand’s
total trade), and also Taiwan, Latin America, and the Gulf
States.

Last week I was in the Middle East where we are
developing an agribusiness service hub in Saudi Arabia to
showcase Kiwi know-how and technology. There’s great
potential for exporting chilled lamb into this region, and
we will be pushing for New Zealand to become a supplier of
choice.

We are addressing what has long been realised as a
huge gap from successive governments in primary-sector
innovation investment. I will talk specifically about the
red meat sector later, but I am proud to say that together
the government and a range of industries have now committed
to invest over $700 million in 17 new and exciting
innovation projects through the Primary Growth Partnership
(PGP).

After last year’s drought there should be no
doubt in anyone’s mind that as a nation we desperately
need more irrigation infrastructure. What New Zealand has is
a water storage issue, not a water shortage issue. That is
why this government has committed to investing up to $400
million in irrigation infrastructure.

Yesterday I visited
the Waikato and the countryside is looking extremely
parched. I will be watching the situation over the next few
weeks very closely.

We are also helping to realise Māori
agribusiness potential. Iwi own 1.5 million hectares with
300,000 ha under full production. The remaining land has
huge productivity potential which MPI is working alongside
of Iwi to develop.

A recent report confirmed that lifting
the productivity of this land could result in an $8 billion
increase in exports and create a further 3,600
jobs.

The Red Meat Sector

There are
many challenges and opportunities in the Red Meat
sector.

This sector has been one of continual change,
mostly for the good. This change has been as a result of
innovations, new market demands, and changing
environments.

By way of example, the massive change of
deregulation and subsidy removal in the 1980s led to new
efficiencies driven by farmers. So while we saw a reduction
in New Zealand’s sheep flock from 72 million in 1984 to 31
million now, we produce the same amount of meat with less
than half the flock size.

This confirms to me how farmers
are innovators, adopting new technology inside the farm gate
and lifting productivity and returns.

To provide more
context of the scale of change we are facing - growth in our
trade to China increased by 45% last year alone.

We need
to be aware of these changes, and we need to adjust and
adapt to make the most of them.

I’m aware that you are
voting on whether remaining wool levies held by Beef + Lamb
be used to fund a business case for a wool levy under the
Commodity Levies Act 1990, to establish a new industry
partnership called Beef + Lamb New Zealand Genetics, and
support for additional funding for the Meat Industry
Excellence Group (MIE).

I will be watching the voting
results with interest.

So how is the red meat sector
doing?

Not a week goes by where I don’t hear how dairy
is taking over the sector; how the red meat sector is on a
downward spiral; and how New Zealand is becoming one giant
dairy farm.

This is not what New Zealand wants, and it is
not what I want.

I am optimistic about the red meat
sector’s future.

Last month I released the updated MPI
forecasts for primary sector exports. These figures show
that the meat industry is having a pretty good year, with
exports projecting $1.2 billion higher than initially
forecast.

The main driver of the change in forecast values
is the increase in lamb export value, which rose by almost
40% over the original forecast. This was primarily caused by
increased demand from China.

An additional driver is that
volume of production didn’t dip as much as expected as a
result of last year’s drought. Basically pregnancy rates
for ewes were higher than expected and lamb growth rates
were impressive. Beef returns have also been very
solid.

Having said that, I do want to acknowledge that the
industry does have some serious challenges. I also want to
acknowledge that times are tough for some of you out there.
I’m not going to pretend that life is all rosy and well
for everyone. What I do want to do though is focus on
solutions and a plan to lift the performance of the industry
as a whole.

So, here are my thoughts on how we lift the
performance of the industry:

We will not improve the
profitability of this sector by doing more of the same, or
by simply by selling more of the same. We need to innovate,
collaborate, and develop market
opportunities.

Innovation

New Zealand
has a proud history of innovation in this sector. But we
need to do more. That is why this Government has committed
the most funding of innovation in the red meat sector in
recent history. In total through the PGP the government and
industry are investing $326 million into the sector.

This
investment is expected to generate around $2 billion in
benefits to the New Zealand economy.

The range of projects
is vast and exciting. From farm management systems in the
Farm IQ programme, to turning traditionally low value offcut
products into higher value added products in areas such
ingredients and health products in the Food Plus
programme.

These projects are cutting edge and are already
showing great progress in delivering more profitability into
the red meat sector.

Collaboration

We
need to do a better job of collaborating as a sector. I know
that commercial realities mean this is not possible all the
time, but there is no excuse to not pursue NZ Inc approaches
on certain initiatives, particularly in-market.

Once again
the PGP has made a start on this. One programme has
co-investors including the Alliance Group, Silver Fern
Farms, ANZCO Foods, Blue Sky Meats, Greenlea Premier Meats,
Progressive Meats, Beef + Lamb New Zealand, ANZ Bank and
Rabobank.

Here we have in one collaborative project a
large proportion of the key players in the industry sitting
around the same table, including both cooperatives. This is
very exciting and could be a great start for even more
collaboration.

Developing market
opportunities

We also need to invest in
additional human resources in our key and emerging markets.
I have taken on board the learnings of the last year and
that is why MPI is putting six more staff into China, one
more each into Jakarta and Dubai, with another four more
positions to be announced.

It is vital that we have enough
people in these markets to broaden our presence, to deepen
relationships, and to be on hand should anything go
wrong.

I am keen to see more industry representation in
these key and emerging markets. The Government can only do
so much for the industry, we need you to be working
alongside us.

Before I move on I want to make one final
point.

If we don’t talk about the good stuff we are
doing no one else will. Just from scanning the rural
publications I note that Silver Fern Farms are beginning
online distribution in Shanghai, New Zealand cricketers are
pitching in for marketing into India, and the Silere branded
merino meat was a huge hit at the America’s Cup in San
Francisco.

The best way to put a sector into a downward
spiral is to consistently talk doom and gloom. It is not
true that the meat industry is on the way out. This industry
is capable of truly leading the world in its innovative and
profitable approach to selling high quality meat.

I will
continue to back this sector and I will continue to
acknowledge the great success stories. We need to hear even
more pride and passion from everyone involved.

The
structure of the sector

Can I acknowledge and
congratulate the MIE for the hard work and dedication they
are showing, with members taking time out of their day jobs
to pursue a cause they truly believe in.

Getting MIE
farmers elected onto the cooperative boards has been a
success that needs to be acknowledged. I wish them well with
the remit vote.

I would like to say a few words on the
structure of the industry.

My role as Minister is to
listen to, to act on behalf of, and to support, this
sector.

So I now publicly reiterate statements that I have
made in a variety of forums. If a significant portion of the
sector, and this means across the whole sector come together
with a solution of how they want to better the industry, my
door is open. I will listen and I will do what I can to
support the sector.

Any substantial change needs to come
with a very clear and very broad level of support. I am not
prepared to interfere in the structure of a sector without
the support of that sector. The Government doesn’t own the
industry – you do.

I doubt that anyone in this room
wants the heavy hand of government dreaming up bureaucratic
solutions that haven’t come from the ground up.

This is
an industry where farmers can have a say. For example, the
two farmer run cooperatives have over 50% market share in
New Zealand.

It seems very clear to me that if an
overwhelming majority of people want change, there is the
ability to bring it about.

Before I conclude I’d like to
address the proposal of a meat industry summit.

I
encourage all members of this industry to collaborate, to
talk, and to resolve issues.

I don’t think anyone wants
another talk fest or a meeting where only a few turn up and
those that do aren’t prepared to fully engage. I believe
any meaningful event must have the commitment of all the
players of the industry including MIE, Beef and Lamb, MIA,
Federated Farmers, the processors, and the banks.

If the
MIE or any other group organises a pan-industry summit,
committed to resolving issues in the sector I will commit to
attending and engaging in this summit.

In fact, I will
even offer to find a suitable
venue.

Conclusion

This is your
industry, and the industry’s future is vital, not just to
us here in the room but to New Zealand. I am committed to
doing what I can to support the industry’s continued
success.

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